Relay Therapeutics(US:RLAY)2024-05-02 20:15PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements show a net loss of $81.4 million, an improvement from the prior year, with total assets at $841.4 million and strong liquidity Condensed Consolidated Balance Sheets Total assets were $841.4 million as of March 31, 2024, with total liabilities at $95.7 million, maintaining strong liquidity Balance Sheet Items (In thousands) | Balance Sheet Items (In thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $152,866 | $143,736 | | Investments | $596,742 | $606,350 | | Total current assets | $770,100 | $770,103 | | Total assets | $841,441 | $843,980 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $37,144 | $30,269 | | Total liabilities | $95,677 | $91,977 | | Total stockholders' equity | $745,764 | $752,003 | Condensed Consolidated Statements of Operations and Comprehensive Loss Total revenue reached $10.0 million, leading to a net loss of $81.4 million, an improvement from $94.2 million in the prior-year quarter Income Statement Items (In thousands, except per share data) | Income Statement Items (In thousands, except per share data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | License and other revenue | $10,007 | $226 | | Research and development expenses | $82,403 | $82,827 | | General and administrative expenses | $19,799 | $19,579 | | Loss from operations | ($90,363) | ($101,177) | | Net loss | ($81,387) | ($94,239) | | Net loss per share, basic and diluted | ($0.62) | ($0.78) | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $50.3 million, offset by $48.9 million from financing, resulting in a $9.1 million cash increase Cash Flow Activities (In thousands) | Cash Flow Activities (In thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($50,323) | ($67,130) | | Net cash provided by investing activities | $10,531 | $75,314 | | Net cash provided by financing activities | $48,922 | $1,297 | | Net increase in cash, cash equivalents, and restricted cash | $9,130 | $9,481 | Notes to Condensed Consolidated Financial Statements Notes detail the company's clinical-stage business, $10.0 million Genentech revenue, and capital raises, confirming sufficient funding for one year - The company is a clinical-stage precision medicine company with lead product candidates RLY-2608, RLY-4008 (lirafugratinib), and GDC-1971 (migoprotafib) in clinical development30 - The company expects its existing cash, cash equivalents, and investments of $749.6 million will fund planned operating expenses and capital expenditures for at least one year from the date of the financial statements34 - In Q1 2024, the company sold 1,889,597 shares under its At-the-Market (ATM) offering, receiving net proceeds of $17.9 million54 - In January 2024, the company completed a private placement of 2,500,000 shares, receiving net proceeds of $29.8 million55 - The company recognized $10.0 million in revenue from the Genentech Agreement during Q1 2024, related to the achievement of a specified milestone6264 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses improved Q1 2024 net loss of $81.4 million due to milestone revenue, with $749.6 million cash expected to fund operations into 2026 - The company is advancing its pipeline, including Lirafugratinib (FGFR2 inhibitor), RLY-2608 (PI3Kα inhibitor), and Migoprotafib (SHP2 inhibitor), with several clinical trials ongoing747576 - The company believes its cash, cash equivalents, and investments of $749.6 million as of March 31, 2024, will be sufficient to fund operating expenses and capital expenditure requirements into the second half of 202688124 Results of Operations Revenue increased by $9.8 million due to a Genentech milestone, leading to an improved net loss of $81.4 million for Q1 2024 Financial Metric (In thousands) | Financial Metric (In thousands) | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | License and other revenue | $10,007 | $226 | $9,781 | | Research and development expenses | $82,403 | $82,827 | ($424) | | General and administrative expenses | $19,799 | $19,579 | $220 | | Net loss | ($81,387) | ($94,239) | $12,852 | - The increase in revenue was primarily due to a $10.0 million milestone payment achieved under the Genentech Agreement in Q1 2024105 Liquidity and Capital Resources The company holds $749.6 million in cash and investments, with $50.3 million used in operations, sufficient to fund into 2026 Cash Flow Summary (In thousands) | Cash Flow Summary (In thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Cash used in operating activities | ($50,323) | ($67,130) | | Cash provided by investing activities | $10,531 | $75,314 | | Cash provided by financing activities | $48,922 | $1,297 | - In Q1 2024, the company received $29.8 million in net proceeds from a private placement and $17.9 million from at-the-market offerings113114122 Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate sensitivity on investments, with minimal impact from a 100 basis point change and negligible foreign currency risk - The company's main market risk is interest rate sensitivity on its investment portfolio, but a hypothetical 100 basis point adverse movement is not expected to have a material impact133 - Foreign currency exchange risk is not material as expenses are generally denominated in U.S. dollars135 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024137 - No material changes were made to the company's internal control over financial reporting during the first quarter of 2024138 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its business - The company is not currently a party to any material legal proceedings141 Item 1A. Risk Factors Key risks include clinical development uncertainty, reliance on third parties, financial losses, need for capital, competition, and intellectual property protection - The company has a limited operating history, has incurred significant operating losses since inception, and anticipates continued losses for the foreseeable future9225227 - Clinical product development is a lengthy, expensive process with an uncertain outcome, and positive data from early studies are not necessarily predictive of later results9145155 - The company relies on third parties to conduct clinical trials and manufacture its product candidates, which poses risks to timelines, quality, and regulatory compliance9189197 - The company will need to raise substantial additional funding, and an inability to do so could force it to delay, reduce, or eliminate product development programs9231 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In January 2024, the company completed a private placement, selling 2,500,000 shares for net proceeds of $29.8 million - In January 2024, the company sold 2,500,000 shares of common stock in a private placement for net proceeds of $29.8 million375 Item 5. Other Information This section discloses the adoption and termination of Rule 10b5-1 trading plans by several executive officers during the quarter Name (Title) | Name (Title) | Action Taken (Date) | Type of Arrangement | | :--- | :--- | :--- | | Sanjiv K. Patel (CEO) | Termination (02/26/2024) | Rule 10b5-1 trading arrangement | | Sanjiv K. Patel (CEO) | Adoption (02/27/2024) | Rule 10b5-1 trading arrangement | | Thomas Catinazzo (CFO) | Termination (01/26/2024) | Rule 10b5-1 trading arrangement | | Thomas Catinazzo (CFO) | Adoption (02/15/2024) | Rule 10b5-1 trading arrangement | | Peter Rahmer (Chief Corp. Dev. Officer) | Termination (02/15/2024) | Rule 10b5-1 trading arrangement | | Peter Rahmer (Chief Corp. Dev. Officer) | Adoption (02/22/2024) | Rule 10b5-1 trading arrangement | | Brian Adams (Chief Legal Officer) | Termination (01/23/2024) | Rule 10b5-1 trading arrangement | Item 6. Exhibits This section lists exhibits filed, including the Securities Purchase Agreement and certifications from the Principal Executive and Financial Officers - The report includes required certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1) and the Securities Purchase Agreement from the January 2024 private placement (Exhibit 10.1)379